Winklevoss twins lead investment in start-up shopping site

Cameron (L) and Tyler (R) Winklevoss, founders of social networking website ConnectU, leave the US Court of Appeals for the Ninth Circuit in San Francisco to attend a court hearing in a lawsuit against Facebook Inc. and its founder Mark Zuckerberg on January 11, 2011 in San Francisco.
AFP

by
Peter Lattman

While many are still lamenting the failures of the Facebooks initial public offering, two of its most well-known shareholders are no longer wringing their hands.

Instead, Cameron and Tyler Winklevoss - the twins referred to as the "Winklevii" in the movie "The Social Network" - are using prodigious winnings from their legal settlement with Facebook to build a portfolio of investments in start-up internet businesses.

The Winklevosses recently led a $US750,000 investment in Hukkster, a start-up shopping web site based in New York. The site is a savings manager that allows shoppers to track online merchandise and then receive a notification when the price drops.

Hukkster, started by two former retail industry consultants, Katie Finnegan and Erica Bell, makes money by collecting a small referral fee for each sale it drives to retailers. It has more than 10,000 users and has had success working with the likes of J. Crew, Bloomingdales and ShopBop.

"Hukkster is about buying something that you really need and really want rather than buying something out of emotion," Ms Finnegan said, comparing her service to the flood of emails from daily deals, flash sales and auctions.

The Hukkster stake is the second investment by Winklevoss Capital, a start-up venture firm that is putting money into early stage technology companies. The brothers first investment this year was a $US1 million stake in SumZero, a website that connects professional money managers. The 31-year-old twins - Olympic rowers who competed in the 2008 Games - have yet to open an office, but are looking for space in Manhattan’s Flatiron neighbourhood.

The Winklevosses were Harvard classmates of Facebooks founder, Mark Zuckerberg. They created ConnectU, a social networking site at which Mr Zuckerberg briefly worked. They then sued Mr Zuckerberg, claiming he stole ideas and computer code from ConnectU.

In 2008, Mr Zuckerberg and Facebook settled the case, paying the twins $US65 million - $US20 million in cash and $US45 million in stock. At the social networks current share price, the stock portion is worth about $US150 million.

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The two learned about Hukkster over the summer, after a friend sat next to Ms Bell at a wedding on the Jersey Shore. Impressed with the Hukkster concept, the friend - "he’s in private equity, so he’d rather not be mentioned," Cameron said - introduced Ms Bell and Ms Finnegan to the Winklevosses.

"We started digging in and using the site," Cameron said. "We then had dinner with Katie and Erica and within a couple of weeks we had a deal confirmed."

The latest venture round for Hukkster comes on top of $US250,000 in seed capital invested by a group that included Jerome S. Griffith, the chief executive of Tumi, and Chris Fiore, a former executive at American Eagle Outfitters.

Ms Finnegan, 29, and Ms Bell, 28, are quick to differentiate Hukkster from trendy so-called flash sale outfits like Gilt Groupe and HauteLook, or internet coupon sites like Groupon. Unlike those sites, which "push" deals onto their members, Hukkster only notifies users about price reductions for items they have decided to track.

Here is how it works. A Hukkster button sits on a browser, and as shoppers browse and see desired merchandise they can "hukk it" by clicking the button. At that point, the customer tells Hukkster what size, colour and price she is willing to pay. The site monitors the price of the item, and when it drops - or a coupon materialises - the customer gets notified by email or text message.

"Its the pull rather than the push - that’s the key," Cameron said. "Youre only getting a notification if you’ve asked for it."

For now, Hukkster is a shoestring operation, with three full-time employees working out of Ms Finnegans tiny West Village apartment.

Throughout the day on Monday, Cameron sent DealBook email alerts from Hukkster about deals that the site had flagged for him.

"I just saved 15 per cent on these Topsiders today!" he said.

Later in the day he excitedly forwarded two notifications from Levis - 30 per cent off on a two-pack of standard fit tees and a 30 per cent discount on 511 black-stretch skinny jeans.

On the three purchases, Cameron said, he saved $US35, or about 25 per cent of the original amount he would have paid.

"I have to say the emotional charge of getting one of these alerts is pretty awesome!" Cameron wrote. "Its kind of like I pulled out my winter jacket for the first time this year and discovered $US35 that I did’nt realise was still in there."

Tyler, surprisingly, said he had yet to "hukk," but had a ready excuse for not using the site.

"Its OK because Cameron and I wear the same size," he said. "He does the hukking for both of us."